TO: Board of Supervisors
FROM: Steven Lederer, Director of Public Works
REPORT BY: Steven Lederer, Director of Public Works
SUBJECT: Maintaining Existing Rates for Collection of Solid Waste, Recyclables, Green Waste and Food Waste for the Unincorporated Area of Garbage Zone One
RECOMMENDATION
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Authorization to maintain existing rates that were previously made effective October 1, 2024, for the residential and commercial operational cost associated with the collection of solid waste, recyclables, green waste, and food waste applicable to the Unincorporated Area of Garbage Zone One, a service which is provided by Napa County Recycling and Waste Services, LLC. (No Fiscal Impact)
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BACKGROUND
This item is specifically exempt from the voting requirements of Article XIIIC of the California Constitution because these fees are imposed by a private third party, Napa County Recycling and Waste Services, LLC (NCRWS), under the Franchise Agreement as granted by the County to NCRWS on May 3, 2005 and amended and restated on December 19, 2017, and because a rate increase is not proposed.
NCRWS Rate Package - Summary:
On June 2, 2025 the Public Works Department received an application for an adjustment of rates for the operational cost associated with the collection of solid waste, recycling, green waste, and food waste from NCRWS in Garbage Zone One (Zone One), which serves much of the south county. The Public Works Department completed their review of the application, pursuant to Article 6 - Contractor Compensation and Customer Rates, of the amended and restated Franchise Agreement between the County and NCRWS. Under Article 6, NCRWS is entitled to request one rate adjustment annually. Per the amended and restated Franchise Agreement, the County shall adjust rates, either up or down, to reflect:
1. Contractor Compensation adjusted for agreed upon profit and inflation; and,
2. Actual changes in any of the pass-through components (Solid Waste Tip Fee, Green Waste Tip Fee, Net Recycling Processing Fee, Food Waste Tip Fee, and the Carpet Tip Fee) of each rate. The impact of changes to the pass through costs is applied to each rate and is dependent on the services rendered, resulting in different percentages for different rates.
Contractor Compensation and Pass-Through components of the proposed rates are described more fully below.
1. Contractor Compensation at 2.7% for agreed upon profit and CPI (capped at 5% per Section 6.2C of our agreement)
2. Increase in the Solid Waste disposal fee from $73/ton to $74/ton
3. Increase in the Green Waste tip fee from $55/ton to $60/ton
4. Increase in the Carpet Waste tip fee from $59/ton to $60/ton.
5. Increase in the Food Waste Tip Fee from $65/ton to $70/ton
6. Decrease the Recycling Processing fee from a CHARGE of $25/ton to a CREDIT of $10/ton.
Increased costs due to CPI and certain services provided by the City of Napa are more than offset by the change in the net recycling processing fee from a cost of $25/ton last year to a credit of $10/ton this year. The large changes in this fee are related to the resale markets for recycled material, which tend to be quite volatile. The City and the County have worked together to develop this fee on a 3-year rolling average in the future to minimize this volatility. Company and staff recommend that rates currently in place, that were effective October 1, 2024, be continued without change. The 2024 rates are as attached. Holding rates steady this year will result in the over collection of about $165,000 (2% of revenue) which will be tracked and used to reduce and offset any needed rate increase next year.
Comparing Zone 1 rates to others in the County:
Zone 1, 35 gallon cart=$52.34
Upper Valley Disposal Services (UVDS), County unincorporated, 32 gallon cart=$59.43
City of Napa, 35 gallon cart=$42.88 (there are planned increases of about 40% over the next 4-years).
Requested Action:
Adopt NCRWS proposal to maintain current rates for garbage and recycling services.
FISCAL IMPACT
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Is there a Fiscal Impact? |
No |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
Approving the rates allows for recovery of costs for performing a critical service and an increase in franchise fee revenue consistent with the terms of the franchise agreement. |
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Is the general fund affected? |
No |
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Future fiscal impact: |
The County receives franchise fee revenue that equals 10% of the fee revenue collected by NCRWS. The franchise fees are utilized to reimburse the County for expenses incurred related to Zone 1. |
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Consequences if not approved: |
The County would be in breach of its contract with NCRWS if we failed to act on their rate proposal request. |
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ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: These fees are not subject to the California Environmental Quality Act pursuant to Title 14 of the California Code of Regulations, Section 15273(a)(1) and (2).